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Government may widen subsidy net to cover all cooking fuels

Government may widen its subsidy net to cover all cooking fuels including piped natural gas and bio-gas along with the existing subsidy on LPG and kerosene. Niti Aayog’s proposal for a comprehensive ‘cooking subsidy’ is being deliberated at the top level and could form part of government’s election manifesto with general elections juts months away. The move would benefit all consumers besides making it attractive for consumers to switch to alternate cooking fuels.

The Aayog had written to ministry of petroleum and natural gas last year to consider introducing a cooking subsidy for all types of cooking fuels through direct benefit transfer instead of LPG and kerosene subsidy.

A senior government official told ET that the nodal ministry has been asked to estimate the financial implication of the proposal to subsidise all kinds of cooking fuels. Government has earmarked Rs 20,000 crore as LPG subsidy and another Rs 4500 crore as kerosene subsidy for 2018-19.

“NITI Aayog is of the view that there should not be multiple subsidies in a sector. There should be one consolidated subsidy to benefit all users irrespective of the form of cooking,” the official quoted above said, requesting anonymity.

According to the official, attaching the subsidy to LPG is creating distortions in adopting alternative clean forms of fuel. The Aayog has written to the nodal ministry that piped natural gas (PNG) is the most efficient form of fuel in urban areas and biogas should be the preferred option in rural areas given availability of raw materials.

The Aayog believes that PNG will be a better option even in tier-II, tier-III and large villages and that the Petroleum and Natural Gas Regulatory Board should promote the cooking fuel in these areas by allowing more number of distributors.

Currently all LPG consumers have to buy fuel at market price. However, the government subsidises 12 cylinders of 14.2 kg each per household in a year by directly transferring the subsidy amount to the users’ bank accounts.

The think-tank envisages that beneficiaries should be provided cooking subsidy through the DBT and should have the freedom to decide on the cooking fuel. As per the current practice, customers eligible for subsidy buy LPG cylinders depending on the prevailing market price and the subsidy amount is then remitted to beneficiaries’ bank accounts. However, no such subsidy is provided for fuels other than LPG and kerosene.

The government is making a big push for electric vehicles. The growth forecast is high and the policy is clear. However, the uptake will depend on the ability of the state governments to create charging infrastructure. The policy field was cleared last year. The ministry of power clarified in Apr 2018 that charging stations do […]